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Dec 09, 2019 | Blogs | Banking

State Bank of India cuts its lending rates by 10 bps

State Bank of India cuts its lending rates by 10 bps

The Reserve Bank of India has maintained a status quo on the policy repo rate. Yet, the State Bank of India, country’s biggest lender, has cut the one-year standard MCLR, Marginal Cost of Funds based Lending Rate by 10 basis points. The new rates will come into effect from 10th December. Post this rate cut, SBI’s one-year MCLR falls from 8% per annum to 7.90% per annum currently.

SBI had linked floating rate for home & MSME loans to an external standard/benchmark i.e. repo rate, starting from October 1 this year. The fresh loans were sanctioned with reference to the repo rate, the new MCLR is expected to benefit only the earlier borrowers; those who have taken loans before October 1.

State Bank of India has cut its MCLR eighth time in this financial year, consecutively.

What is MCLR?

Marginal Cost of Funds based Lending Rate is the minimum rate of lending for a bank. Below this rate, the bank is not permitted by the RBI to lend any kind of loan. Although, in some exceptional cases, RBI holds the right to authorize the banks to reduce the rate.


How does MCLR affects you?

It is the benchmark rate to which your floating rate loan will be linked, in case you are opting for the same. Also, if you have taken a home loan and it is linked to a 6-month MCLR, your interest rate will be reset/changed only after those 6 months are completed. The rate will reset only if there is a change at the supposed time of reset.

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